In this new series from Team 2iQ, our analysts look back at interesting insider trading data within specific countries.
The intention of these trading retrospectives is to gauge how insider buying and selling can reflect the economic performance of a country. In this edition, we’re looking at some 2iQ reports on US-based companies.
With one of the largest global economies and home to many of the world’s most influential businesses, this time it’s the United States.
Why is it worth tracking the trading performance of insiders within a specific country?
Because they have access to the most up-to-date data about their company, top-level insiders such as C-suite executives have an information advantage over other investors. Insider buying can provide investors with a more complete picture of what's going on in the world's publicly traded companies.
If insiders from the same country are buying stock across a variety of sectors, it could imply they’re optimistic about the nation’s economic health and that of their sector. 2iQ’s analysts produce insider activity reports regularly for a range of countries.
Microsoft Corp (MSFT:US)
Microsoft is one of the world's largest technology firms, providing a diverse range of products. It is a key participant in the corporate productivity, cloud computing, and gaming industries, among others. The company has a market value of $2.12 trillion and is traded on the NASDAQ Global Select Market.
In March 2021, 2iQ reported on an insider trade at Microsoft. Board member Emma Walmsley purchased 4,300 MSFT at a price of around $236.80.
This trade cost Walmsley roughly $1 million and increased her holding in MSFT by around 600%.
As of today, the stock price currently sits at $284.27 compared to the price of $236.80 purchased in March 2021. The stock has reached a high of $350 since then.
The hefty sum of these insider trades, in addition to excellent Q2 2022 results from Microsoft, are very promising indicators for curious investors.
ON Semiconductor (ON:US)
ON Semiconductor is a major semiconductor company that serves hundreds of markets and tens of thousands of customers. It has a market value of $24.15 billion and is traded on the NASDAQ Global Select Market.
An ON Semiconductor board member, Gregory Waters, purchased 17,000 ON shares in September 2021. The insider paid $45.26 per share, costing around $770,000.
This trade bears some similarities to the aforementioned Microsoft trade, including that the insider massively increased their holdings in the company. In this instance, Waters increased his by 208%.
Another comparison is the solid growth of the stock’s value since this purchase, with ON shares hitting a high of $70.95 since Waters purchased stock at $45.26 per share.
Comparing the growth of a range of different sized companies within the same industry - in this case technology - can be a great method of assessing the overall health of a country’s market.
But how are US companies outside of the tech sector faring?
Cleveland-Cliffs Inc (CFS:US)
Cleveland-Cliffs is a vertically integrated producer of iron ore and steel products. The corporation is the largest and oldest independent iron ore mining company in the US. It has a market value of $13.6 billion and is traded on the New York Stock Exchange.
In March 2021, 2iQ reported on two top-level insiders purchasing CLF stock:
- Chairman, President and CEO Lourenco Goncalves purchased 100,000 CLF shares. This was at a price of $13.17 per share, costing him around $1.3 million.
- Executive Vice President Keith Koci purchased 15,000 CLF shares at a price of $13.45 per share, costing him around $200,000.
In total, these insiders spent over $1.5 million on CLF stock, and at the time of reporting 2iQ analysts noted the insiders demonstrated strong confidence that the stock was set to rise.
Since then the price of CLF has hit a high of $33.11, and is currently sitting at around $25.92.
Russia’s invasion of Ukraine has had a significant impact on the steel market, which has been felt by US companies nationwide. Analysts have been identifying Cleveland-Cliffs as a top steel option, due to an upward trend in stock value that is likely to continue due constantly improving company earnings forecasts.
Whilst it’s difficult to fit every US sector within one report like this, it’s not a leap to suggest that one of the world’s most significant economies has had a strong rebound across a range of industries after an eventful few years.
As alluded to earlier, the United States’ gargantuan technology industry has continued to increase in value, likely due to an increased focus on online services and ecommerce.
Check out the 2iQ blog for more insider reports from across the globe.